Published: April 02, 2008 02:25 am            

CITY OF LOCKPORT: Housing court tries new tactic to get violations resolved

The city is trying out a new tactic in the push to get somebody to take responsibility for their dilapidated housing.

On Tuesday, housing court was adjourned briefly for a closed-door conference call between city officials, property owner David Stewart and a mortgage company that is owed approximately $60,000 but apparently doesn’t want the property.

Afterward, Judge Thomas DiMillo reported onto the record, the mortgage company may consider erasing Stewart’s debt to remove its ownership liability.

Stewart was summoned to court this past November to answer four charges of violating state building code at 31 Elmwood Ave. He’s still the owner of record of the house he lived in for 17 years, then reportedly abandoned three years ago when he stopped paying the mortgage.

In monthly appearances, Stewart has explained to the court, he was foreclosed on by Investors One Corp. and left the house long ago.

In the meantime, city Prosecutor Matthew Brooks said, Investors One did not complete the foreclosure by taking title to the property.

The Tuesday conference call was about getting Investors One’s attorney to acknowledge its ownership interest in the house. The attorney balked, initially, according to Brooks, but after the state definition of “owner” was read to him, he acknowledged the mortgage company technically might be on the hook.

Investors One is the first financial institution to respond to a city court summons on building code violations, Brooks said. Several institutions have been sent violation notices recently as the city presses cases in which property ownership is fuzzy because of incomplete foreclosure.

According to DiMillo, the Investors One attorney suggested the company might be willing to release its lien on 31 Elmwood. That would leave the property title to Stewart free and clear.

To Stewart, he said, “the upside is that you would own the property. The downside is you would own the property” with its outstanding code violations.

The case is complicated by the fact that the property appears on the City of Lockport’s annual tax foreclosure list. If back taxes totaling about $9,000 are not paid by April 30, the city will move to take the title and put it on the auction block this summer.

DiMillo asked Stewart to consider whether he could pay that bill. During a court recess, Stewart apparently visited the city treasurer’s office, found out he could get a tax payment plan going, and later told DiMillo “it’s not impossible.”

DiMillo cast the outstanding violations as “minor” and Brooks suggested if Investors One does write off the mortgage, Stewart could reclaim his old home for a fraction of the outstanding debt. The Investors One attorney had indicated if the house has less than $100,000 resale value, foreclosure might not be worth pursuing.

“If (Stewart) wants to pay the taxes ... fix it up and live there without a mortgage, that’s a good deal,” Brooks said.

If back taxes are not paid, however, the question of who’s responsible for the code violations remains, he said.

In tax foreclosure, the “equitable” owner, the mortgage company, is punished by the seizure of its investment. Theoretically, the violations remain uncorrected until a new owner takes on the liability.

“Does that mean (Stewart) gets a free ride?” Brooks asked. “Shouldn’t he still be prosecuted?”

DiMillo suggests it’s a fair question. Had Stewart taken steps the “wash his hands” of the title, he said, by offering to turn it over to the mortgagor outright when he abandoned it, there’d be no question who’s responsible for the violations.

“Legally, what you did wrong is you didn’t protect yourself,” he advised Stewart. “It left you open to this.”

The case was adjourned until April 8, when another phone conference between court officials, Stewart and the mortgage company attorney is scheduled.

In other housing cases, DiMillo ordered arrest warrants issued for two property owners who failed to appear for arraignment Tuesday. Mark Aquino, owner of 35 Beattie Ave., faces four code violation charges and Marion Mackney, owner of 39 W. Grant St., faces a single code charge.

        

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